First Time Home Buyer Advice

First time buyers guide to house surveys and mortgages

Buying a house is a big expense, but let’s break it down for first time home buyers and see exactly what you’re going to need to pay for in the process of buying a house.

The costs of buying a house

In addition to your mortgage there are also many other expenses which come with buying your first house.

Stamp duty — First time buyers of properties under £300,000 don’t need to pay stamp duty, above £300,000 you need pay to stamp duty which will be 5% of the cost of the property over £300,000. In London, this exemption is also available for up to £500,000.

Legal fees — You will need a solicitor or licensed conveyor to do the legal work for you when buying a home. This will usually be between £850 and £1,500 including VAT. The solicitor or conveyancer can also do local searches for any problems or plans in the area, which will cost you around £200 to £300.

Removal fees — You’re going to need to move your stuff to your new house. Removal costs will vary depending on how much you have to move, also most companies will charge more for weekend removals.

Insurance — Your mortgage lender is going to insist you insure your property to protect their investment. It’s also a good idea to look into getting contents insurance to protect your belongings.

Other costs — Of course, there will be other ongoing costs, like council tax, be sure to check which band you are going to be in so you can calculate your monthly outgoings. There are also utility bills like gas, electric, water, internet and TV licence fee which will all need to be budgeted for.

House surveys for first time buyers

The only report you will be obliged to get is a mortgage valuation. This will probably cost you around £150 to £200, and is merely to satisfy your lending agent that the property you are buying is a reasonable investment. For your own peace of mind you will need to get either a HomeBuyer Survey if your property is fairly new, or if you are looking at an older property or one which you intend to renovate, a Building Survey. The price of your HomeBuyer Survey or Building Survey report will vary depending on the value of your prospective home, you can find out more with our difference between a Building Survey and HomeBuyer report.

How to get a mortgage

When getting a mortgage, there are many factors that affect your eligibility, such as credit score, length of employment in your current job, any debts you may have, whether you’re self-employed and of course, how big your deposit is.

Your credit report — You can easily get a copy of your own credit rating to see what a mortgage lender will see before you apply. You can request a copy of your credit report very cheaply from credit reference agencies such as Experian or Equifax.

To get your credit record in the best possible shape there are a few quick and easy things you can do.

Make sure everything is correct and up to date, if you’ve had joint accounts with anyone in the past, you will need to get a letter of disassociation, since a previous partner’s bad credit rating could affect yours

Get on the electoral register. Contact your local council and get yourself listed at your current address. Lenders use the electoral roll to combat identity fraud and to check you actually live where you say you do

Close down any unwanted or unused bank accounts and credit cards

Avoid making several applications. Each application you make leaves a footprint on your credit history and too many will make it appear like you’re over stretching your finances

Prove you’re stable and secure. Too many changes of address and job will make you appear less reliable, so try and stay put

Manage your finances. Whether it’s a credit card, a bank account or a mobile phone contract, by managing your payments in a reliable fashion you give a better image to mortgage lenders

Prove your income — Mortgage lenders will want to see some evidence of your income, the best way to do this is with your P60, which shows your yearly earnings. If you’re self-employed, it may be a little more difficult to get a mortgage approved. Lenders will normally want to see an SA302 form relating to the last three years from HMRC or your full accounts for the last three years.

Your deposit — It goes without saying that the larger your deposit the better. With a higher deposit you can get better rates of interest, lenders reserve their best interest rates for buyers with a 40% deposit.

Buying together is easier — Buying with a partner means you can include both incomes. Also, if they have a good credit rating, it will help with the application process.